Trading on Palin

I love prediction markets, not because I think they are accurate but because I’m so often surprised at what they reveal about how people are interpreting the news. One indicator I’ve been tracking on Intrade is the market predicting whom the GOP candidate will be in 2012. Today I noticed that Sarah Palin’s “stock” has been behaving interestingly since her resignation earlier this month. See the chart, below:

She announced her resignation on July 3. At that point, Intrade’s market put the percentage probability of Palin becoming the 2012 GOP presidential nominee at 13%. The news prompted a huge selloff, on high volume, halving that percentage to 6.5% in one day. But since, her stock has steadily risen, and the market now puts her chances of emerging as the nominee at 16%–higher than before she announced her plans to step down.

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the author | mckinsey consultant based in london | former speechwriter for queen rania of jordan | former economics writer at council on foreign relations | winner of 2009 emmy award | see full profile at LeeHudsonTeslik.com